Banking, Money and Taxes in China
Opening a bank account in China is easy, but managing banking and taxes as an expat can be difficult due to the language barrier.
It is highly recommended to open a bank account in China as continuously withdrawing money from an overseas account via ATMs incurs expensive fees. To open a bank account expats need their visa, their proof of residence, their passport and a long rope of patience. Often it is possible to connect with an overseas bank account allowing for money transfers between onshore and offshore accounts.
Information provided by banks is often written in Chinese and it is a good idea to either ask for an English translation or bring along a Chinese reader. While Chinese banks will provide new account holders with a debit card which works at the many ATMs in any major city, paying for goods at stores is usually done in cash. The daily ATM withdrawal limits are lower than in Europe or the US, thus if you anticipate spending large sums of money, opening two accounts can increase your withdrawal amount.
Expats living in China between one and five years must pay taxes on income derived from China and on income brought into the country. After five years expats must pay tax in China on their worldwide income; though, deductions are applicable if tax is also paid to the home country.
For many expats, who live in both China and a separate country, the total days spent inside China are used to determine tax status.
Incomes over RMB4,800 are taxed at a progressive rate which can reach 45 percent of income for top tax brackets. Tax laws change often and it is important to keep up to date as the country has been increasingly concerned with tracking expat taxes.
As in any country the tax laws are complex and may be better dealt with through a tax planner. Companies should help newly hired employees initially register for the tax system.
Banking in China
It is highly recommended to open a bank account in China as continuously withdrawing money from an overseas account via ATMs incurs expensive fees. To open a bank account expats need their visa, their proof of residence, their passport and a long rope of patience. Often it is possible to connect with an overseas bank account allowing for money transfers between onshore and offshore accounts. Information provided by banks is often written in Chinese and it is a good idea to either ask for an English translation or bring along a Chinese reader. While Chinese banks will provide new account holders with a debit card which works at the many ATMs in any major city, paying for goods at stores is usually done in cash. The daily ATM withdrawal limits are lower than in Europe or the US, thus if you anticipate spending large sums of money, opening two accounts can increase your withdrawal amount.
Taxes
Expats living in China between one and five years must pay taxes on income derived from China and on income brought into the country. After five years expats must pay tax in China on their worldwide income; though, deductions are applicable if tax is also paid to the home country.
For many expats, who live in both China and a separate country, the total days spent inside China are used to determine tax status.
Incomes over RMB4,800 are taxed at a progressive rate which can reach 45 percent of income for top tax brackets. Tax laws change often and it is important to keep up to date as the country has been increasingly concerned with tracking expat taxes.
As in any country the tax laws are complex and may be better dealt with through a tax planner. Companies should help newly hired employees initially register for the tax system.
